During the pandemic, federal student loan borrowers received more than just a pause in payments. They also got an invisible boost to their credit scores. Thanks to emergency policies, accounts that were delinquent or even in default were marked as current, removing negative marks that normally weigh heavily on credit reports.
But that temporary relief is coming to an end. With forbearance programs expired, the Federal Reserve Bank of New York warns that millions of borrowers may soon see delinquencies and defaults reappear on their credit reports. For many, this means saying goodbye to the credit score bump—and facing new financial challenges if action isn’t taken quickly.
Why the Pandemic Credit Boost Is Disappearing
Here’s what happened:
-
Normally, payments 90+ days overdue are considered seriously delinquent and may eventually be classified as in default.
-
These negative marks usually show up on credit reports, lowering scores and limiting access to credit.
-
During the pandemic, emergency rules prevented this reporting, allowing many borrowers’ accounts to look “current” on paper.
The impact was huge:
-
Borrowers who were delinquent gained a median 103-point increase in their credit scores.
-
Borrowers in default gained a median 72 points.
Now that reporting protections have ended, accounts are once again reflecting reality. Those who didn’t get caught up during the pause could see their credit scores drop sharply in 2025.
What a Credit Score Drop Really Means
Credit scores are grouped into categories, and moving up—or down—even a single tier can have major financial consequences.
Credit Score Categories
-
800–850: Excellent
-
740–799: Very Good
-
670–739: Good
-
580–669: Fair
-
300–579: Poor
A 100-point boost during the pandemic might have pushed someone from fair into very good. But losing those points on the rebound could mean falling back into fair or even poor.
That shift matters because it affects:
-
Access to credit: Lower scores may lead to fewer approvals.
-
Cost of borrowing: Lenders charge higher interest rates to riskier borrowers.
-
Insurance premiums: In many states, lower scores mean higher rates.
-
Housing opportunities: Landlords often review credit before approving leases.
-
Employment prospects: Some employers consider credit history in hiring decisions.
What Borrowers Can Do Now
If you’re worried about what happens when your student loan status updates on your credit report, here are proactive steps you can take:
-
Look into income-driven repayment (IDR) plans. These tie your monthly payment to your income, making repayment more manageable. Staying current can help rebuild your credit over time.
-
Avoid using credit as a lifeline. Covering everyday expenses with credit cards can dig a deeper hole. Instead, cut costs where possible or explore side income options.
-
Be selective with new applications. Too many inquiries at once can drag down your score further. Only apply for new credit when necessary.
-
Monitor your credit monthly with CreditVana. With free 3-bureau monitoring and AI-powered insights, you’ll know exactly how student loans are affecting your score—and get tailored recommendations for improving it.
CreditVana’s Take
The pandemic pause was always temporary, but its impact on borrowers’ credit scores was historic. Now, as reality sets back in, it’s more important than ever to stay on top of your student loans and your credit profile.
At CreditVana, we believe that staying informed and proactive is the best way to protect your financial future. Whether it’s avoiding missed payments, reducing debt, or keeping track of your score, small, consistent steps today can help you avoid major setbacks tomorrow.
👉 Next Step: Log in to CreditVana.com to see your updated 3-bureau scores and get personalized strategies for protecting your credit in 2025 and beyond.
